Full House Resorts Q3 2026 Earnings Call Transcript

Full House Resorts (NASDAQ:FLL) reported third-quarter financial results on Thursday. The transcript from the company’s third-quarter earnings call has been provided below.

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Summary

Full House Resorts reported a 4.9% increase in revenue to $81.8 million for Q3 2026, while Adjusted EBITDA declined slightly to $14.6 million compared to $14.8 million last year.

American Place had its best quarter ever, and Rising Star reported its best third quarter in three years. Silver Slipper’s Adjusted EBITDA grew by 13.6%.

The company outlined several cost-saving measures at Chamonix, targeting more than $10 million in bottom line improvements. These measures include bringing operations previously outsourced in-house and shifting marketing strategies.

Full House Resorts is working on refinancing with a new $100 million credit facility and $315 million in funding for the permanent American Place casino, despite challenges in the credit market.

Management highlighted ongoing strategic adjustments to improve profitability and efficiency across properties, while also noting potential minimal impact from proposed gaming tax changes in Colorado.

Full Transcript

OPERATOR

Greetings and welcome to the Full House Resorts third quarter 2026 earnings call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press Star 0 on your telephone keypad. Please note this conference is being recorded. I would now like to turn the conference over to your host, Adam Campbell. Please go ahead.

Adam Campbell (Investor Relations)

Thank you and good afternoon, everyone. Welcome to our third quarter earnings call. As always, before we begin, we remind you that today’s conference call may contain forward-looking statements that we’re making under the safe harbor provision of federal securities laws. I’d also like to remind you that the company’s actual results could differ materially from the anticipated results in these forward-looking statements. Please see today’s press release under the caption “Forward-looking statements” for the discussion of risks that may affect our results.

Also, we may reference non-GAAP measures such as Adjusted EBITDA. For a reconciliation of those measures, please see our website as well as the various press releases that we issue. Lastly, we are also broadcasting this conference call at fullhouseresorts.com, where you can find today’s earnings release as well as all of our SEC filings. And with that said, we’re ready to go.

Louis Fanger (Chief Financial Officer)

Thank you. Good afternoon, everyone. Thanks for joining us to discuss our third quarter results. And I know there’s another call going on at the same time, so we’ll be on the briefer side with you today. I’ll start with the headlines. American Place had the best quarter in its history. Rising Star had its best third quarter in three years. Silver Slipper grew its Adjusted EBITDA by 13.6%. And at Chamonix, we’ve already started on more than $7 million of cost improvements and are targeting more than $10 million of total bottom line improvements in the near term.

On a consolidated basis, revenue grew 4.9% to $81.8 million, compared with $78 million in the prior-year period. Adjusted EBITDA was $14.6 million versus $14.8 million a year ago. Last year’s third quarter included the benefit of a gaming tax accrual adjustment at our Colorado operations. Our Midwest and South segment grew adjusted segment EBITDA by 18% to $13.6 million, with all three properties improving, and its margin expanded by 2.2 percentage points.

Operating income rose 28.6% to $4.4 million. So let me walk through the properties really quick, starting with American Place. As I mentioned, the third quarter was the best quarter it’s ever had. Since opening, American Place has increased both revenue and adjusted property EBITDA in every single quarter compared with the prior-year period since opening. That’s a consistent record. And that’s as two casinos moved from riverboats into land-based facilities, Wind Creek opened, Bally’s in downtown Chicago opened, the Potawatomi Casino in Milwaukee expanded, and the Hard Rock in Rockford opened its permanent casino.

In real time, American Place’s revenues and adjusted property EBITDA continue to grow while our overall penetration into the northern Chicagoland market remains low. More than ever, we believe that our permanent casino, which is designed to have roughly twice the square footage of our current temporary facility, can generate more than $100 million a year of EBITDAR. That’s before we pay any rent under our current existing lease with the city. At Rising Star, gaming revenue was up 9%, hotel revenue was up 6% in part due to occupancy being 5 percentage points higher, and food and beverage revenue was up 24%. All of that helped us deliver our best third quarter in three years.

At Silver Slipper, EBITDA increased 13.6% versus the prior-year period. A focus on efficiencies throughout its operations helped, as did a reduction in property insurance rates. At Chamonix, the most important trend this quarter is growth. At the top of our database, we saw gains in our two highest-value segments. That’s players worth $1,000 or more and players worth between $350 and $1,000. These are the guests who matter most to a property like Chamonix, and they’re coming more often. In July of this year, a large wildfire burned near a few of our feeder market cities. I think it was the eighth-largest wildfire in Colorado’s history, and residents in the region were told to stay indoors.

That kept visitors away for a meaningful part of the month and also led to the quarter getting off to a slower-than-expected start. The quarter was helped by a strong September, when room nights sold were up 10.4% year over year. While revenues have grown at Chamonix and at Bronco Billy’s, we expect them to continue to grow also. But as revenues have grown, we’ve adjusted operations. Rather than operate the business for the revenues that we expect to have in the coming years, we’re operating it for the business levels that we have today. As a result, we’ve already commenced on approximately $8 million of cost improvements at Chamonix. That’s in addition to our focus on growing our midweek group business and continuing to grow revenues overall.

We don’t expect these changes to meaningfully affect customer service levels. A few examples: We eliminated little-used services like room service, which was rarely used and is not offered at any other casino in the state. We staff three casino cages because we operate under three casino licenses, which gives us a lower average gaming tax rate. Some of these cages see very little activity midweek. So PBX calls will now roll into the cages instead of a separate operator team.

This actually should improve customer service, as our cages are staffed 24 hours a day whereas our PBX operations were not. We’re bringing housekeeping and laundry operations in-house. We started to phase out our outsourced housekeeping company last month, and the transition is expected to be largely complete by the end of this month. Laundry is not expected to be in-house until the first half of next year. Combined, those in-housing efforts are expected to save us about $1 million per year, and that’s net of costs to lease the laundry equipment.

With marketing, we’re shifting from broad TV and radio advertising to more targeted digital spend, which we expect to save about $1.5 million per year. And then over at the steakhouse, we ended the consulting agreement for its operations. That will save about $300,000 per year, and it makes it easier and more efficient for us to use that space for dining periods beyond dinner. That’s just a sampling of some of the changes that have either already been enacted or are expected to be enacted soon. Taken together, these steps lower Chamonix’s cost base while we keep building the top line. It sets Chamonix up to generate meaningful positive cash flow in 2027. Those were the big points that I had. Dan, I don’t know if you had anything else to add or—

Daniel Lee (President and CEO)

I think you covered it pretty well. And in the interest of time, let’s just go to Q&A.

OPERATOR

All right, thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press Star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press Star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the Star keys. And our first question will come from Jordan Bender with Citizens.

Jordan Bender (Analyst at Citizens)

Hey, everyone. Good afternoon and thank you for the question. You know, just kind of to start with the whole financing in Illinois kind of conversation here. Yeah, there’s probably not much for you guys to say. Would, you know, obviously open if you are willing to kind of talk about that process to the extent that you can. But I don’t think the CapEx bill in ’26 was all that large. I know you had started process of building that out in ’26. I mean, have you started, or have you stopped any work at the site, or just kind of, how do you explain what’s going on currently there?

Thank you.

Daniel Lee (President and CEO)

Well, I’ll address the site. Very little work at the site, but there is work going on behind the scenes. We’ve been working with the architects and the designers on refining the plans. The more refined the plans, the more certain you are on the cost and so on. And so we’ve spent a couple million dollars in the last couple months on that, and that’s ongoing. The next chunk of work at the site is like a $5 million thing. And frankly, well, we have $5 million and at some point we might do that.

I mean, as the press release shows, we have decent liquidity. We’d really like to have all the financing in place before we really launch things because it’s kind of expensive to start and stop, and let Louis address the financing.

Louis Fanger (Chief Financial Officer)

Not a whole lot, to your point, Jordan, that we can say. But let me try to get a little bit out there for you. You know, as we outlined in our recent 8-K, the envisioned refinancing has three parts. First, there was a new $100 million credit facility, which we expect to stay largely undrawn, would give us plenty of liquidity. Four banks have agreed to that. Second, we add $315 million of funding from a third party to build the permanent American Place casino.

Importantly, that funding would be on a delayed-draw basis with no ticking fee, which meaningfully reduces the amount of capital needed to be raised. Both of those agreements are essentially final and ready for signature. The third piece is a new bond to replace our existing notes, slightly larger in size, primarily to accommodate legal and banking fees and the paydown of our existing revolver. You know, our timing was unfortunate as the Fed raised rates just as our process was starting. And that resulted in a weakening of the single-B credit markets and the triple-C market largely shutting down. We think we fall in between a single-B and triple-C rating, and we expect to grow back into a B rating as our American Place and Chamonix operations continue to improve. You know, we’ve spoken to a handful of our largest bondholders and some potential new bondholders about our refinancing, and we remain in active—constructive, I should say—dialogue with them about completing that refinancing.

So that’s—

Daniel Lee (President and CEO)

Yeah, I mean, listen, we’re eager to get going. The permanent will make a lot more money than the temporary. So it’s kind of a win-win. But if you were to graph triple-C credits, they took a big spike in late September in yield, and they do that on occasion. But they usually only do it for a few weeks at a time. But about every five years there’s a spike. And it has been the highest spike in about five years. And the one before that was about five years before that.

The one before that was 2008. And so that makes it a little complicated because nobody wants to price a new bond that trades down. We all want a bond that trades well. And so we’re trying to figure out that conundrum. But the good news is these windows don’t usually close for very long. They— you know, I think if we have an improved market, the single-B market’s not as bad as the triple-C, but it also backed up some. And so, you know, we’re optimistic we’ll get there.

It’s in everybody’s best interest to get there. You know, it’ll make more money. We will be a better credit. Of course, the state and the city want to see the thing get built as quickly as possible. Everybody wants this thing as quickly as possible. And we have the overall financing, say, is mostly done, but we have one very important key thing left, and that’s refinancing the existing bonds.

Jordan Bender (Analyst at Citizens)

Perfect, thank you. And then, switching gears to Chamonix and just kind of following up on some of the cost-saving initiatives that are going on there. You’re obviously heading to the seasonally slower period of the year. Maybe the results there will start to show up more in the spring and summer of next year. But as we get to that point, I guess, what is the updated view on where you think you can get margins to with the ongoing process of addressing some of these cost issues around the property?

Daniel Lee (President and CEO)

Well, our revenues have been growing and we’ve been gaining market share, but we’re still a long way shy of where we think the revenues could be. But we were operating this in a lot of ways as the property we hoped it to be. And we finally said, wait a minute, we need to make money. And there are two other casinos in town whose revenues are not much different than ours, and they’re both comfortably profitable, like 10 to 20 million EBITDA. We can do that as well.

And when we started comparing, you know, what do we have to do? And you realize stuff like room service hardly ever gets used. Even Monarch does not offer room service. And we said, well, why are we the only casino in the state offering room service? And there were shifts where people would come in and work, and very few orders were given or were taken. Louis mentioned the cages. We benefit from having three licenses. It’s a little bit of a historic anomaly. We have to operate three different cages. The principal purpose of a cage these days is to redeem the gaming chips. We only have one table game pit, and so that cage sees most of the action. The other two cages we have to keep open. It saves us on the tax rate, so we save like 4 million a year on gaming taxes, but we probably spend 8 or 900,000 of it funding having these other cages.

And, you know, as we were looking for all sorts of ways to get more efficient, it suddenly occurred to us that the people who worked at our PBX desk, which is kind of hidden in the bowels of the building — these are the people who take phone calls for room reservations and stuff — they have gaming licenses because they have to access the gaming system to see if somebody qualifies for a comp, for example, and there’s no reason they can’t be sitting in the cage.

And so we redid our phone system so that it rings in the least busy cage. And if that line happens to be busy, it goes to the second cage. And if that happens to be busy, it goes to the third cage. And if all three are busy, then it goes to voicemail. But rarely are all three busy. And so we’re not closing a cage, but we have figured out how to keep the people sitting in the cage gainfully employed, and we no longer have to operate a separate PBX.

So that was a complete win. And we had a little rockiness at first because you had to train people right and you had to get the technology right. But it’s pretty smooth now. I’ve been calling every morning pretending I’m a customer, and it goes smoothly, and it saves us a significant amount of money. Housekeeping. We had an outside company doing it who primarily does hospitals, and we kept trying to get them to be more efficient, and we finally gave up on them. We operate, obviously, our own housekeeping at Rising Star and in Silver Slipper. And so we gave them notice, discontinued them. We’ve been hiring housekeepers and training them. We have a director of housekeeping, and that contract ends November 23rd and saves us about $600,000 a year.

Our laundry goes down to Colorado Springs and goes to a commercial laundry there. We operate our own laundry at Rising Star, which is a similar-size hotel. And we do it at less than half of what we’re paying in Colorado Springs. So we have a space in Cripple Creek where we can put laundry equipment and operate our own laundry. It’s going to take us about six months to get that in place. The laundry equipment can be leased, and even net of the rent of the laundry equipment, that probably saves us 400,000 a year.

Our restaurant operating hours, which Louis didn’t mention, we’ve reduced back. There’s no reason to operate three restaurants in the middle of the week when there’s not enough customers to keep them all profitable. So the high-end restaurant, which is quite successful, makes money on weekends, would lose it midweek. And we decided there’s no reason to operate it midweek. And so we’ve cut back on that. We had a consulting arrangement with a very good chef and restaurant manager in Las Vegas.

It was kind of expensive, but they were very helpful. They trained the staff and did the menus and all of this stuff. And the value they brought was primarily when it first opened because it helped establish it. And I think the food and beverage team we had at that time would have stumbled over that restaurant. Now the restaurant is well established. The people working there are well trained. And we have a food and beverage manager who’s shown that he’s very competent at it.

And there was just no reason to be paying a consulting fee to the guys in Las Vegas. And we were allowed to cancel that contract and did. That ends in a week. I think it ends in November and saves us 250,000 to 300,000 a year. And I think we’ll speed — in fact, it’s almost the opposite. The only ramification of doing that is we have to alter the menu some so we’re not using their recipes and stuff that are tied to them. But frankly, it was time to make some changes in the menu anyway.

And so our food and beverage team, which is very good, will now come up with their own spins on different things. And that gives us a marketing opportunity to invite people into the new menus. So there’s a lot of just blocking and tackling that we’re doing that will make sure this place is profitable next year — comfortably profitable next year. We should be able to make between 10 and 20 million in 2027 and grow from there. And now, you know, it’s disappointing because we’re in at $300 million, and people have asked us, well, would you sell it? Yeah, we’d sell it. If somebody offered us the right price, it would probably be at a loss of the $300 million investment we have.

But given how expensive our debt is, it would probably make sense to do that at some point. But you want to get it trending profitably and going in the right direction and evaluate it at the time. But that’s kind of where it is.

Louis Fanger (Chief Financial Officer)

Yeah, I think the only real—

Daniel Lee (President and CEO)

Just to be clear, because I know employees listen in on this, it’s not for sale. Don’t anybody panic. It’s just people ask that question, would you sell it? Listen, we’re a public company. Anything’s always for sale. That doesn’t mean we’re actively trying to sell it. But the question came up from investors, would you sell it? Of course we would, under the right circumstances. And that would be true of any asset we have. We have a financial obligation to our shareholders to do that.

But at the same time, I don’t want our customers or employees to panic. We’re not — there is no sale imminently contemplated.

Louis Fanger (Chief Financial Officer)

The only other thing I had to add there was, you know, a lot of the things that Dan described are actively moving, so either implemented in October or about to launch in November or very shortly thereafter. You know, Dan walked through the cage savings and restaurant hour changes and that sort of stuff. You know, when you look at that piece, that efficiency piece — I didn’t really quantify it for you — but that’s about, when all is said and done, about $4.5 million of savings.

At this point, we’re maybe about $2 million into that $4.5. The other pieces that Dan described are largely in place for savings sometime in the fourth quarter, except for that laundry piece, which, as Dan mentioned, is probably six months away. The last piece we didn’t really talk about was trying to push — continuing to try and push — group business a little further. If you look at where the group business sat down last year, it was 1 percentage point of occupancy. And, you know, that number will, of course, trend higher. The stretch goal is something like 10 percentage points of occupancy in the coming year. But, you know, that’s kind of the stretch. Realistically, can you be somewhere kind of mid to high single digits?

I think the answer is probably yes.

Daniel Lee (President and CEO)

Well, and some of this, like getting rid of the outside housekeeping and bringing it in-house, will probably hurt us a little bit in November — not a lot, but a little bit — because we’re training housekeepers to replace the outside company. So you have a little bit of a cost associated with that, but there should be pretty significant savings going forward. Another one that’s a good example of a win-win: We have a pretty good sales team now in sales and marketing — seven people. When the property opened, there was only one. And they are putting stuff on the books in future years. And the head of that mentioned to me that they would really like to have an additional breakout room. We have very good meeting room space. I thought we had plenty of meeting room space. And she said, no, actually we could use more.

And we were thinking about what do we do? What do we do? Literally right across the elevator lobby from the convention area, there was a reception area for the spa. And it had kind of a retail venue and all this stuff. And very seldom is there anybody hanging out in that reception area. And the retail sales of spa goods was minimal. And it makes a perfect breakout room. And all we have to do is remove the retail stands that are in it and buy some folding chairs.

And we have an additional breakout room that’s bigger than any of the three breakout rooms we have now. And the spa doesn’t miss a beat because people go to the spa to get a massage, to use the exercise room, to get to the pool — all of which can be accessed through different routes in the building. So we’re changing the signage to tell people: if you get a massage, this is where you go; if you want to use the exercise room, this is where you go; if you need the locker room, this is where you go. And we can take the lobby of the spa and redeploy it as meeting room space. The only capex is some folding chairs — I mean, it’s nothing. And it actually saves us money because we’ve historically had a receptionist there who got paid, and there really isn’t a reason to have a receptionist there. And so we’re looking for ways like that.

And on the marketing, we’re also — it’s a big focus — trying to do more with less. We’re spending quite a bit on marketing. We’re trying to make sure that we can reduce our marketing spend but continue the pretty steady growth it’s had in revenues, and even accelerate the growth in revenues, because eventually when people experience it, when they’re there, they come back. We had a very big meeting of — I forget the exact name, but they are business execs from throughout Colorado — that filled the town, but principally us.

We’re the major hotel in town for the third week of September. And most of whom had not been to Cripple Creek before.

Louis Fanger (Chief Financial Officer)

Ninety percent had not been to Cripple—

Daniel Lee (President and CEO)

Creek. Yeah. And this is the sort of thing — you bring them up there because they are meeting planners who may come back. And that week went very nicely and we got a lot of nice comments. And that’s the sort of thing you do to build the business in the future.

Jordan Bender (Analyst at Citizens)

Great. Thank you very much.

Daniel Lee (President and CEO)

You got it. Thanks, Jordan.

OPERATOR

And our next question will come from Ryan Sigdall with Craig Hallam Capital Group.

Ryan Sigdall (Analyst at Craig-Hallum Capital Group)

All right. Hey, good afternoon. Dan, Louis. I don’t think I caught—I’m asking both my questions up front here and I’ll turn over the others, but did you quantify the weather impact in the quarter, or can you? And then, secondly, you’ve tried several different marketing strategies at Chamonix. A targeted digital strategy certainly seems obvious from where I sit, but I guess why haven’t you tried that earlier? What gives you confidence this will work and work better than the prior approaches?

Thanks. Good luck, guys.

Daniel Lee (President and CEO)

Don’t disappear yet, Ryan. So, first question—you said weather impact. We did have a hurricane event in Mississippi in October, which may be what you’re referring to, but otherwise what we referred to was wildfires in Colorado in the early part of the third quarter. We did not quantify that impact, for what it’s worth, but it wasn’t small. Revenues were running up 10% to 12% in the months leading into July, and July was down a little bit or flat, so you can guesstimate it from there. But then September went back to the growth trend. And the hurricane in Mississippi in October did not impact us. It did not hit us, did not create any damage. Our road coming in got flooded for a short while, so there was a day or two where we had very little business, but there was no property damage to the property whatsoever.

Yeah, you always get an impact as people prepare for the event, and then an impact after the event as people clean up. And so we had an impact on both sides, but otherwise no damage. It wasn’t that serious. Yeah. October might be a little weak compared to October last year, but… And apologies, Ryan, your second question—just run that by us one more time.

Ryan Sigdall (Analyst at Craig-Hallum Capital Group)

Yeah, and I was talking about the wildfires that you guys called out specifically in the quarter, but hopeful on the hurricane. Just on the marketing strategy, moving to a targeted digital strategy—I guess you guys have tried buying different databases, tried different marketing teams. There have been several different iterations of the strategy in Chamonix, I guess. Why did you wait until now to do a digital, kind of more efficient strategy set?

Logically makes sense to me. But then what gives you confidence this will work better than the previous approaches?

Daniel Lee (President and CEO)

We’ve been moving that way steadily. We’re getting more and more that way. You know, we also had hired a new VP of marketing a year and a half ago, or 15 months ago, and [they] opted to retire, and so we’re now in the market for a new director of marketing, which I think is a priority for us. We do have a corporate marketing person, which we hired a year and a half ago, spending a lot of his time there. We’ve asked the team from American Place, who have been in regional casinos for a long time, and the number two person in American Place is one of the sharpest marketing guys in the business, in my opinion.

And they’re both helping out to try to figure out the Rubik’s Cube of Colorado, I guess, is the word I’m looking for. But what’s a little mystifying is people will argue, well, they don’t like to drive up into the mountains, and it’s like, well, they certainly do to go to Breckenridge or to go to Vail. They drive right by us to get to Breckenridge. And lots of people do that, both winter and summer. And it’s not an easy drive to Black Hawk either. And, by the way, lots of people from Los Angeles drive all the way across the Mojave Desert to get to Las Vegas. So I don’t think it’s that.

I get mystified that our market share is not higher. We are by far the best casino in Cripple Creek, and we have by far the biggest hotel. We should be having a bigger market share. And so that leads us to think, you know, we’re spending more on advertising than anyone else, and we don’t have a commanding market share. There’s something there. And so we’re looking at it and saying, obviously, we’re not being very effective on marketing. Let’s figure out why.

We have actually already cut our marketing back 20%, and we’re not having an impact on our revenues, because our revenues are growing as much as they were last spring. And so we’re trying to make that more efficient, ultimately. I mean, it’s much easier to cut costs than to grow revenues. Ultimately, we need to do both—or want to do both. And to get to what this place should be able to earn, we need to do both.

Louis Fanger (Chief Financial Officer)

Yeah, you know, some of it was by design too, if you think about it, Ryan. Like, you know, whenever you open a brand-new property, especially when you’re trying to draw a market that historically had not been in Cripple Creek, you purposely go out with more in advertising, just generally. Right. You want people to be aware that you opened. It’s something new and different. And so you purposely go out a little broader, and then as time goes by, you would naturally cycle that down anyway.

There’s some of that going on. There’s some of the transitioning into more targeted digital, as Dan went through. And part of that is, look, we’ve got very specific ZIP codes that we want to target, both in South Denver as well as in the Colorado Springs market. And you can layer on top of that people that have historically shown an interest in gaming. And so, ultimately, I think these efforts are going to be quite fruitful and result in lower marketing spend.

So, you know, there’s some logic behind why it was higher at first, but nonetheless, now is the time to reduce it. And we are actively reducing it and feeling good about where it’s all going.

Daniel Lee (President and CEO)

Yeah, I happened to have a conversation about a week ago with somebody who’s affiliated with a different casino in Colorado that’s pretty successful, and we were comparing notes. And he said he figured out early on that the real key to their success was filling the hotel midweek, and they were very focused on that from the very first day. And we’re very focused on that now. We should have been more focused on it when we were under construction, and we weren’t, but we are focused on it now.

Now, I will also say Boyd just announced a deal with Sonesta Hotels where you tie into their frequent player program and so on. That’s the sort of thing that can help your midweek a lot. These big hotel chains have big sales organizations that keep track of where is Microsoft having their next meeting and so on and so forth. [It] gives your salesforce leads to help fill midweek. In addition, you get just the exposure from people can redeem their points with you and earn points in their program and so on.

Cosmopolitan was the first major hotel in Las Vegas that I recall doing it, and it was part of what turned their results around. And then MGM acquired them, and now MGM has a big program like that with Marriott, and we are talking to the major hotel chains about doing something similar to that for Chamonix. Anyway, we don’t have a deal yet, but it’s something we’re looking at. And there’s always a cost involved with those deals, but I think the benefits outweigh the cost.

Ryan Sigdall (Analyst at Craig-Hallum Capital Group)

Thanks, guys. Good luck.

Louis Fanger (Chief Financial Officer)

Yeah, you’re welcome. Maybe time for one more, Dan.

OPERATOR

All right. And we’ll go next to Chad Bynon with Macquarie.

Sam (Analyst at Macquarie)

Hey, Dan and Louis, this is Sam on for Chad. Thanks for taking our questions. First question: last quarter you guys discussed about 175 of win per position per day versus 330 for the broader Black Hawk market. As you implement the cost savings, how should we think about the balance between EBITDA growth coming from the expense reduction versus win per day over the next couple of years?

Daniel Lee (President and CEO)

I think the expense reduction gets us to 10 to 20 million of EBITDA a year. And to go beyond that, we probably need to grow revenues. Does that help you?

Sam (Analyst at Macquarie)

Yeah, fair enough.

Daniel Lee (President and CEO)

Based on our existing revenues, with a normal margin for a regional casino, we should be 10 to 20 million dollars. So that’s what we’re doing. And so, you know, before, we were doing some stuff—we were incurring operating expenses to help build the revenues. For example, we had valet parking and bell service pretty much 24 hours a day, seven days a week. And if you were there midweek and looked in the valet parking lot, there might be six cars there.

And it’s like, wait a minute—nobody’s using our valet parking midweek. Why are we paying a valet parker to stand there and park your car? Let’s just cut it back to in the afternoon and when people are arriving. And maybe midweek, if the anticipated occupancy that night is low, maybe you only need one person. If somebody shows up in a car and they want to valet park and have help with their bags, well, you can park their car in the porte-cochère, you’re not busy, help them with their bags, and then go park in valet parking.

So we’re looking at every single thing and trying to do it in ways that we still provide good service to our customers, that they don’t really realize it. And so, for example, I mentioned you don’t have to go to the spa receptionist to go to the exercise room. That’s actually better service—you can go right to the exercise room, don’t have to go through the spa and through the locker room. And, as it happens, the geography of the building—there’s a public corridor that’s quite pleasant that leads right to the exercise room. So it’s finding ways where we don’t diminish the guest experience. Why would we run room service when nobody orders it?

Right now, we may eventually try to figure out a way that if somebody wants room service, we can do it out of one of our restaurants so we don’t have to staff a separate room service area. And that might be important, for example, to get into one of these hotels. If you’re trying to join a national high-end hotel affiliation, they’ll have a set of things on it, and it might be that you have to offer room service at least at the breakfast hours. Well, if it’s midweek, I don’t want to staff a room service kitchen.

But you could call down to room service—it goes to the casino cage, where we already have a person sitting at a PBX phone. You don’t know they went to the casino cage, but the person answers and says “room service.” They type the order in, and it pops up at the quick-order cook in the Home Café, and they have a waiter to bring your food up to your room, and you’re offering room service. And if there’s only a couple of orders a day, it’s hardly a distraction to the Home Café.

So you look for ways. But at the moment, we just eliminated room service. But if we needed to bring it back in some fashion in order to join the right hotel affiliation, we have ways to do it.

Louis Fanger (Chief Financial Officer)

I think the only other thing to add to your question there is flow-through should be very, very high. You know, outside of gaming taxes and a little bit of reinvestment dollars from a marketing point of view, it’s extremely high.

Daniel Lee (President and CEO)

As long as Louis mentioned gaming tax, I’ll mention something. There was a proposal—or an idea—came out the other day of increasing the gaming tax rate at the highest tiers in Colorado. That’s a long ways from done. It would take a public referendum to pass in order to happen. But if it did happen, the impact on us would be minimal, if maybe none, because of the fact that we have three different licenses. Our revenues—which are growing and not as high as they should be, but whatever our revenues are—are split three ways.

Now, it’s not equally split three ways because the Chamonix license does more revenue than either of the other two licenses. But it is spread over three licenses, and so we’re not in the highest tax tier. In fact, I think our blended tax rate is like 12%, and the highest tax tier is 20%. And so I don’t think that becomes—at any given time somebody’s talking about raising gaming taxes somewhere. I think this is a long ways from happening. But even if it did happen, I don’t think it would have much impact on us.

Well, okay, let me address the second one first. We’re pretty focused on getting American Place, the permanent American Place, built and getting Colorado fixed, and not very interested in taking on anything else in the foreseeable future. So we get phone calls all the time about casinos for sale, and sometimes we’ll listen just to see what we can learn. But we’re very unlikely to take on anything else until we get those two things fixed. In Indiana, exactly what I thought would happen happened. Somebody funded the opposition in those three referendums. It was probably an Indian tribe out of Michigan, and it was structured in a way that it incentivized nobody to fund the pro side. So all three referendums failed solidly, which politically means that nobody’s going to get a casino into the Fort Wayne area anytime soon. And there were a few people in the legislature that were not our friends, and they lost the election.

And that’s kind of nice. I’ll leave it at that. But at the moment, you know, we make money in Rising Sun. It’s not a huge cash cow for us, but it’s a consistent cash cow for us. And that will just continue to be the case. In Wisconsin, the man who was elected governor is a Democrat, and he had been on the city council, I believe, in Milwaukee, which is where the Potawatomi casino is. So the efforts to get a casino in—now, southeast Wisconsin is a very underserved market. I think if the—there’s a small Indian tribe that’s trying to get a casino there, and they’ve been trying for 20 years. I don’t think they’re any closer than they’ve been at any other time. And if they ever did get it on, I think their revenue would primarily come from increased gaming by people who live in southeast Wisconsin.

But I think the governor’s race makes it less likely than ever that they’re going to get a casino there. I haven’t talked to that governor. I don’t know exactly where he stands, but I would expect somebody who comes from Milwaukee, where the Potawatomi are a political force and it’s very important—and he’s on the Democrat side, I think—I just think that puts that further up. Anywhere else, I don’t think it changes much. So Okay, thanks.

OPERATOR

And this now concludes our question and answer session. I would like to turn the floor back over to Louis Fanger, President and CFO, for closing comments.

Louis Fanger (Chief Financial Officer)

Dan, I think—actually, I’m reflecting on that. This doesn’t affect us very much because we’re not a big player in sports betting. But the CalShe and play market. What are they called?

Daniel Lee (President and CEO)

Prediction markets.

Louis Fanger (Chief Financial Officer)

Prediction markets. I mean, those companies came out of nowhere. They’re unregulated, they don’t pay any taxes, and they’ve gotten big fast. And I think after this election, there’s going to be a lot of investigation into what they’re doing, and I think they’ll end up being constrained. Now, that’s not a very big positive for us, but for some of the other casino companies out there, that could be pretty important. That’s it. Yeah. Okay. Well, thank you, guys.

Thank you very much.

OPERATOR

Ladies and gentlemen, thank you for your participation. This does conclude today’s teleconference. You may disconnect your lines and have a wonderful day.

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